Russian cutoff from SWIFT said to be ruled out

(QHA) -

The U.S. and its European allies have ruled out for now barring Russia from a core part of the international banking-payment system because it would cause too much collateral damage, officials familiar with the matter said, according to Bloomberg.

Republican U.S. senators including John McCain of Arizona and Marco Rubio of Florida, seeking harsher penalties over the Ukraine conflict, want Russia ousted from the Society for Worldwide Interbank Financial Telecommunication, the Belgium-based hub for financial transactions used by more than 10,000 institutions. U.K. Prime Minister David Cameron has said “there is a logic” to barring Russia from the system, known as Swift, as two dozen Iranian banks were in 2012.

Yet the U.S. and European governments have kept the tool off the table so far, preferring to exhaust other options and avoid a ban that would penalize companies engaged in legitimate trade with Russia, according to the officials, who asked not to be named because of the sensitivity of the issue.

The U.S. Treasury Department said in a statement to Bloomberg News this week that the Iranian cutoff was “unprecedented and extraordinary,” without commenting on Russia. Swift didn’t respond to questions e-mailed to Brunswick Group, a public-relations firm that represents the cooperative.

Russian Prime Minister Dmitry Medvedev said in January that his country’s response to any Swift restrictions would be “without limits” in economic and other ways, without elaborating. The nation last year threatened to bar European and North American airlines from flying over Siberia, and has also threatened to cut off supplies of natural gas to Europe.